By Bart Minten, Tamru Seneshaw, Kuma Tadesse, and Nyarko Yaw
In brief
Ethiopia is Africa’s most important coffee producer, with coffee export earnings increasing four-fold over the period 2003 to 2013. Changes in policy have led to structural changes in the export sector, with simultaneous increases in international market prices. To expand the coffee export market and raise the profile of Ethiopian coffee internationally, investments to increase quantity and improve quality are needed.
Coffee and government policy
The structure and performance in Ethiopia’s coffee export market over the period 2003-2013 has undergone important changes, both locally and internationally. As a valued and critical commodity to the livelihood of small farmers and to Ethiopia’s economy as a whole, coffee exports have been strongly influenced by changes in government policy, among others the setup of the Ethiopian Commodity Exchange (ECX) and consequent impacts. Coffee export values have risen four-fold over this period, mostly through international market prices coupled with an increase in volume, but also changes in production processes and attached quality premiums from washing, certification and geographic indications of origin.
Topics of research and findings
| Topic | Investigations | Findings |
| Transactions, exports and exporters | Destinations, number of exporters, share of coffee exports, private and public firms. | Ethiopia’s export earnings improved dramatically over the 10-year period |
| Quality | Certification, washing, geographical indications of origin, grades | Demand for certified coffee is on the rise and demands higher pricesLarge price variation based on washed or unwashed coffee and geographic indications of origin |
| Export destination markets | Regional variations in demand of coffee types | Exporters are diversifying |
| Market performance | Export vs local consumption; Effect of the ECX | Coffee marketed by cooperatives sold at much higher prices than the private sector |
Graph showing the changes in exports showing trends in real value and quantities of coffee exports from Ethiopia, 2003 to 2012
Policy implications
| Activity | Implications |
| Provision of investment incentives to deliver washed coffee to market would raise export prices and higher exchange earnings | More widespread setting up of appropriate ecological pulpers for the washing of coffee; reduce the difficulties on imports of milling machines |
| Development of specialty market and participation in certification schemes | Costly process to achieve certification, though this could be developed through local cooperative institutions |
| Improvements in technologies and training to increase coffee yields | Extend research into diseases and adaption, and mitigation of climate change |
Read more in the Working Paper 66 and Research Note 29
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